China to Expand VAT Reforms to More Industries
China will be expanding the value added taxes reform to more industries which will include telecommunications, construction and railways and making it nationwide. Officials have been working to revamp its outmoded tax regime and helping reduce costs for business and launching a trial tax reform in Shanghai a year ago in the efforts to replace business tax with value added tax to firms in the transportation and service industries.
The scheme was to expand to more cities and provinces starting with Beijing last September. The reform will also be implemented in the post and telecommunications, construction industries, railway transportation in an appropriate time. Plus the expansion of the VAT scheme more small and medium sized enterprises will benefit.
Currently Chinese manufacturers are paying a value added tax that is levied on profits, and firms in the service sector are paying business tax that is based on sales revenues. Also the current tax system have drawn criticism since some of the goods ends up being paid both the VAT and business tax.